Initial Read on Holiday Spending Looks Positive

Current projection of gift spending matches last year’s record high

PRINCETON, NJ -- Gallup's initial measure of Americans' 2007 Christmas spending plans points to a holiday season for U.S. retailers that is at least similar to last year's, and potentially better.

The poll, conducted Oct. 4-7, finds Americans planning to spend an average of $909 on Christmas gifts this season. That essentially matches the $907 forecast for the 2006 holiday at this time last year. Also, while Gallup trends show few Americans ever admitting they will spend "more" on holiday gifts than they spent the previous year, the proportion now saying they will spend "less" is on the low side of what Gallup has seen since 1990.

Still, some caution is in order. Americans' perception of the total amount they will spend often changes as the season progresses. Last year, the $907 average estimate Gallup recorded in mid-October fell to $826 by mid-November; in other years, consumers' average estimate of what they would spend increased between November and December.

If Americans' current spending estimate does hold up in Gallup's subsequent measures in November and December, it would be the highest level of projected holiday spending Gallup has seen at any time over the past decade -- not by an extraordinary amount, but possibly enough to make Christmas 2007 a better-than-average retail season. However, even if Americans' average estimated spending drops between now and November by as much as it did in 2006, the figure would still be at the upper end of the range seen in recent years.

Average Anticipated Spending on Christmas Gifts

October

Early/
Mid-November

Late November/
Early December

2007

$909

2006

$907

$826

--

2005

--

$763

$840

2004

--

$730

$862

2003

--

$734

$776

2002

$695

$690

$753

2001

--

--

$794

2000

--

$817

--

1999

--

$857

--

1998

--

--

$655

WideRangeof Budgets

The $909 average price tag for Americans' 2007 holiday gift giving includes a wide range of budgets.

About one-third of adults nationwide (35%) say they will spend $1,000 or more on gifts.

About one-quarter (27%) plan to spend between $500 and $999.

Three in 10 (30%) plan to spend less than $500.

Only 8% offer no estimate at this point, including some who say they don't celebrate Christmas.

Christmas spending intentions vary greatly by income. A majority of those in households earning at least $75,000 per year plan to spend $1,000 or more, compared with only a third of those in middle-income households and 20% of those in low-income households.

Accordingly, the average estimated expenditure among upper-income Americans is more than twice that of low-income Americans: $1,309 vs. $601.

Estimated Christmas Spending by Household Income
Oct. 4-7, 2007

National
adults

$75,000+

$30,000 to
$74,999

Less than
$30,000

%

%

%

%

$1,000 or more

35

58

33

20

$500 to $999

27

24

32

26

$250 to $499

14

10

18

14

$100 to $249

11

5

10

22

Under $100

5

2

3

11

Not sure

8

1

6

8

Mean (w/ zero)

$909

$1,309

$829

$601

No Obvious Crisis for Discounters

In September, the National Retail Federation issued a cautious economic forecast for the holiday season, expressing particular concern about "numerous economic obstacles" dampening the spending of low- to middle-income consumers. Wal-Mart, also reportedly anticipating sluggish sales in the discount market, is already offering discounts on toys to coax holiday shoppers to start buying.

Gallup's new data offer a mixed picture on this score: the average anticipated spending of middle-income Americans this Christmas is down by about $40 from a year ago, while the figure for lower-income Americans is more than $100 higher. However, neither of these changes is statistically significant.

Christmas Spending Intentions,
by Household IncomeMean including $0

October 2006

October 2007

$75,000

$1,284

$1,309

$30,000 to $74,999

$870

$829

Less than $30,000

$482

$601

Recent Trend Has Been Positive

Year-over-year growth in U.S. holiday retail spending (based on the U.S. Census Bureau's "GAFO" measure of department store-type sales) has averaged just over 5% in the past decade. (This is similar to the 4.8% average increase in retail sales derived by the National Retail Federation from Commerce Department data.) According to the Census' GAFO measure, consumer spending increased by 5.4% in November and December 2006 compared with the same period in 2005, and has increased during these months by more than 5% in each of the past four years.

This has been a welcome trend for retailers after a rough patch from 2000 to 2002, when November and December spending gains lagged below 5%. The 1999 Christmas season marked the most successful in recent years, when spending increased by nearly 8% over 1998.

It remains to be seen whether Americans' estimates of their 2007 Christmas spending hold up through the season. But Gallup's first read for the year suggests consumers are on course to maintain a 5% to 6% increase in spending.

In addition to the dollar estimate, Gallup asks respondents to gauge whether their current year's Christmas gift giving is likely to cost more, less, or the same as the previous year's. Most Americans typically perceive that their spending will be about the same; among the rest, a higher proportion tend to say they will be spending less rather than more. That pattern holds true today, but with slightly fewer saying they will spend less than has been the norm, and a slightly higher percentage saying they will be spending the same.

Since 1990, the percentage saying they will spend the same amount as last year has averaged 59%, compared with 66% saying this today. Only 14% currently say they will spend more, not much different from the 16% average for this sentiment since 1990. However, only 19% say they will be spending less, a bit below the 23% average.

Survey Methods

Results are based on telephone interviews with 1,010 national adults, aged 18 and older, conducted Oct. 4-7, 2007. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

Looking ahead for a moment to the Christmas holiday season,

40.
Roughly how much money do you think you personally will spend on Christmas gifts this year?

Trends for Comparison (October of previous years):

$1,000
or
more

$500-
999

$250-
499

$100-
249

Un-
der
$100

No opin-
ion

Me-
dian

Mean
(w/
zero)

Mean
(w/o
zero)

%

%

%

%

%

%

%

%

%

2007 Oct 4-7

35

27

14

11

5

8

$550

$909

$943

2006 Oct 9-12

34

24

13

13

6

10

$500

$907

$945

2002 Oct 14-17

25

26

16

14

2

17

$500

$695

$745

1989 Oct 12-15

18

23

25

15

4

15

--

--

--

Full Trend:

$1,000
or
more

$500-
999

$250-
499

$100-
249

Un-
der
$100

No opin-
ion

Me-
dian

Mean
(w/
zero)

Mean
(w/o
zero)

%

%

%

%

%

%

%

%

%

2007 Oct 4-7

35

27

14

11

5

8

$550

$909

$943

2006 Nov 9-12

34

25

15

14

3

9

$500

$826

$865

2006 Oct 9-12

34

24

13

13

6

10

$500

$907

$945

2005 Dec 5-8

33

27

14

12

3

11

$500

$840

$892

2005 Nov 7-10

30

26

13

16

3

12

$500

$763

$816

2004 Dec 5-8

33

24

17

11

3

12

$600

$862

$920

2004 Nov 7-10

29

25

16

17

2

11

$500

$730

$778

2003 Dec 11-14

31

28

18

13

3

7

$500

$776

$794

2003 Nov 10-12

30

25

18

14

3

10

$500

$734

$773

2002 Nov 22-24

30

30

15

15

3

7

$500

$753

$769

2002 Nov 11-14

25

27

18

14

3

13

$500

$690

$743

2002 Oct 14-17

25

26

16

14

2

17

$500

$695

$745

2001 Nov 26-27

32

30

15

13

2

9

$500

$794

$820

2000 Nov 13-15

33

28

15

13

2

9

$500

$817

$847

1999 Nov 18-21

35

27

14

13

6

5

$500

$857

$893

1998 Dec 4-6

24

25

22

14

8

7

--

--

--

1994 Dec 2-5

22

20

23

19

9

7

--

--

--

1993 Dec 4-6

19

27

20

17

8

9

--

--

--

1992 Dec 12-18

19

24

20

18

10

9

--

--

--

1991 Dec 12-15

20

24

22

19

7

8

--

--

--

1990 Nov 29-Dec 2

17

25

23

19

7

9

--

--

--

1989 Oct 12-15

18

23

25

15

4

15

--

--

--

NOTE: No opinion includes those who do not celebrate Christmas.

41.
Is that more, less, or about the same amount as you spent last Christmas?

More

Less

About
the same

No
opinion

%

%

%

%

2007 Oct 4-7

14

19

66

2

2006 Nov 9-12

16

23

60

1

2006 Oct 9-12

12

18

67

3

2005 Dec 5-8

17

24

59

*

2005 Nov 7-10

14

26

59

1

2004 Dec 5-8

16

23

59

2

2004 Nov 7-10

14

24

61

1

2003 Dec 11-14

19

21

58

2

2003 Nov 10-12

14

23

61

2

2002 Nov 22-24

19

24

56

1

2002 Nov 11-14

12

27

59

2

2002 Oct 14-17

12

22

64

2

2000 Nov 13-15

17

18

64

1

1999 Nov 18-21

19

20

61

*

1998 Dec 4-6

19

21

60

*

1994 Dec 2-5

18

20

62

0

1993 Dec 4-6

20

27

53

*

1992 Dec 18-20

22

28

50

*

1991 Dec 12-15

16

33

43

8

1990 Nov 29-Dec 2

15

26

57

2

* Less than 0.5%

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